M&G has announced it will be launching a direct to consumer (D2C) online service to allow new and existing investors access to lower-cost share classes. The service, which is set to launch this summer, will see cheaper share classes in Isas and individual funds for investors who have a combined total of £5,000 or more invested with the group.
One example of a fund is the £1.3bn M&G Dividend Fund, which will see its charge figure fall by 50 basis points to 1.16 per cent, while the Corporate Bond fund will fall to 0.91 per cent – a drop of 0.25 per cent. An investor with £2,500 in each of the funds will be able to move to the new service and see total annual charges fall by £18.75.
But is such a move by a fund group negative for advisers or a step in the right direction?
Matthew Harris, an adviser at Edinburgh-based Harris Independent Financial Advice, said it is a good thing that M&G has cut its fund management fees, which he believes “have in the past been way too high”.
“This should benefit existing customers if they automatically move them over to the new share classes. I don’t think this means anything regarding whether people use advisers or not. People don’t use advisers because fees are too high on their existing products – although they should. People use advisers because they want advice on what funds they should be investing in and how to put together a lifetime saving strategy.”
Additionally, in line with upcoming MiFID II regulations, M&G will stop charging its clients for external research from 1 January 2017. There will be no increase to the ongoing charge as a result; the group will pay the costs. This move follows Woodford Investment Management, which announced it would be cutting its research costs by April 2017.
charlotte.richards@ft.com
